The Indonesian government sign an agreement with the Japan International Cooperation Agency (JICA) for a soft loan related to the funding of two national strategic priority projects. The government will borrow 127.2 billion Japanese yen (approx. USD $1.1 billion) for the construction of the Patimban Seaport in West Java (USD $1.05 billion) and for turning the Gadjah Mada University into a world class university (USD $66.67 million).
Regarding the Patimban Seaport in Subang (West Java), Indonesian Finance Minister Sri Mulyani Indrawati said the loan will be used to finance phase one of the project. The USD $3.1 billion Patimban seaport is envisaged to become a key international seaport in Indonesia with a 7.5 million twenty-foot equivalent units (TEU) capacity, hence relieving busy traffic at Jakarta's Tanjung Priok port (currently Indonesia's busiest port that handles more than half of the nation's international trade).
Patimban is located about 70 kilometers from Indonesia's capital city of Jakarta. This seaport will significantly improve the flow of goods to - and from - the industrial estates in the regions east of Jakarta, such as Karawang and Cikarang that are key centers for Indonesia's automotive, electronics, machinery and information technology manufacturing sectors. Moreover, with the completion of the 117-kilometers long Cikopo-Palimanan toll road (often called the Cipali toll road) in late-2015, there now exists adequate access from Patimban to Jakarta.
The Indonesian government is currently finalizing the tender for the construction of the first phase of the Patimban seaport. Construction is expected to start in January 2018, while commercial operations should start by March 2019 (at first the car terminal will become active with an annual capacity of 360,000 vehicles). Japan will have a 49 percent stake in the Patimban Seaport. The remainder will be in Indonesian hands (25 percent controlled by state-owned companies and 26 percent controlled by local private companies).
Regarding the Gadjah Mada University (UGM) in Yogyakarta, the soft loan will be used to finance the development of ten learning centers to strengthen the university's research facilities and human resources.
The soft loan will have an interest rate between 0.1 - 6.521 percent depending on the Japanese yen (JPY) LIBOR interest rate + 10 basis points (per year). Including the grace period, Indonesia will have 25 years to repay the full loan.
Indonesia's Largest Seaports:
(in million TEU)
Source: Investor Daily